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Construction
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Contributing editor: Robert S Peckar 2010
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qatar Lalive in Qatar LLP
Qatar
Marcus C Boeglin and Michael E Schneider
Lalive in Qatar LLP
1 Joint ventures
Must foreign designers or contractors enter into a joint venture with a
local contractor to design, build and be paid for their work? Does the
law require that the local contractor control the joint venture?
As a matter of principle, construction and engineering work in Qatar
may be performed only by Qatari establishments. Exceptions may be
granted on an ad hoc basis. Establishments for the performance of
construction and engineering work normally are established as joint-
venture companies under the Commercial Companies Act (Law No.
5 of 2005) in one of the forms provided by that Act.
The investment in such an establishment is subject to the Foreign
Investment Law (Law No. 13 of 2000) which allows foreigners to
invest in all national economy sectors, provided that they have a
Qatari partner which has a share of at least 51 per cent of the capi-
tal in the joint venture. The same requirement applies to consulting
engineering firms, which may be registered according to Law on the
Practice of the Engineering Profession (Law No. 19 of 2005); the
Qatari partner again must not have less than a 51 per cent share. The
parties of the joint venture are free to provide in the shareholders’
agreement that the foreign shareholder has a share in the profits that
is greater than the entitlement according to the shareholding. Man-
agement control may be achieved through a management agreement
between the company and the foreign investor.
Exemptions from the requirement of a Qatari shareholding may
be granted by Emiri decree in case of foreign investments in certain
sectors such as industry, agriculture, mining, energy, tourism or con-
tracting, provided the investment is geared towards developing the
industry in question or providing a public utility or service that serves
the best interests of the country.
A foreign company may be exempted from the requirement of a
Qatari sponsor by way of a ministerial decision for the execution of
a project awarded by government entities or agencies. The exemp-
tion is usually a formality for a foreign company which is awarded
such a contract.
2 Foreign pursuit of the local market
If a foreign designer or contractor wanted to set up an operation
to pursue the local market what are the key concerns they should
consider before they took such a step?
A foreign contractor may start by setting up a representative office to
explore the market. The establishment of such a representative office
requires a licence from the Ministry of Economy and Commerce. A
representative office may not engage in commercial activities other
than exploring business opportunities.
128 Getting the Deal Through – Construction 2010
3 Licensing procedures
Must foreign designers and contractors be licensed locally to work
and, if so, what are the consequences for working without a licence?
Foreign companies proposing engineering work in Qatar are subject
to Law No. 19 of 2005 on the Practice of the Engineering Profession,
which applies to architects and various branches of engineering. This
law requires that the joint venture must be registered and must reg-
ister its engineers in the register established at the General Authority
for Construction Planning and Development. Violations of this rule
will lead to the imposition of penalties on the entity as well as the
punishment of the individual working without a licence.
4 Labour requirements
Are there any laws requiring a minimum amount of local labour to be
employed on a particular construction project?
Qatar Labour Law No. 14 of 2004 provides that priority be given
to employment of Qatari nationals. The law empowers the Min-
istry of Labour and Social Affairs to determine the admitted pro-
portion of foreign workers. Non-Qatari workers can be employed
with the approval of the Labour Department after the employing
company has obtained the permit to perform work in Qatar and
an authorisation to employ foreign personnel. The applications for
these authorisations must include the employment contracts with an
Arabic translation.
In practice, the great majority of managers, engineers and work-
ers employed in the Qatari construction industry are foreigners (see
also questions 5 and 29).
5 Local labour law
If a contractor directly hires local labour (at any level) for a project,
are there any legal obligations towards the employees that cannot be
terminated upon completion of the employment?
Qatar Labour Law No. 14 is applicable. The wages are regularly
provided for in the employment contract. There are no regulations
on minimum wages and no trade unions in Qatar.
Law No. 14 provides in article 73 for the maximum of ordinary
working hours per week (48 hours in general and 36 hours during
Ramadan) at the rate of eight hours per day and for minimum annual
leave during certain holidays.
6 Health and safety regulation
Are there any specific health and safety rules regulating the
construction industry?
There are no industry-specific health and safety regulations. Health
and safety rules are provided for in Law No. 14. Article 99 of that
law requires the employer to give directions for the avoidance of
risks at the work place and take other precautions. Some government
directives have an impact on the industry, for example directives of
Lalive in Qatar LLP qatar
the Labour Department restricting work in open-air sites during the
summer months (namely 15 June to 31 August). During this period,
morning working hours must not exceed five hours in total and may
not continue after 11:30am. Afternoon working hours must start
after 3pm. Companies working in the petroleum and gas sector are
not subject to this ministerial decision.
7 Close of operations
If a foreign contractor that has been legally operating decides to close
its operations, what are the legal obstacles to closing up and leaving?
As a prerequisite for winding up, a construction joint venture must
obtain an income tax clearance certificate from the Income Tax
Department evidencing payment of income tax on the profits of its
Qatar operations and clearance from the Ministry of Labour.
8 Standard forms of construction contracts
What standard-contract forms are used for construction and design?
There are no officially adopted or prescribed standard-contract forms
and conditions. The principal employers for construction work have
their own standard contracts or conditions or develop them for the
project, sometimes by reference to international contract conditions.
The most important of these contract conditions are those of Qatar
Petroleum (QP); its standard conditions are also used by some gov-
ernment entities. Other public entities, such as the Qatar General
Electricity and Water Corporation (KAHRAMAA), have developed
their own standard contract conditions. The FIDIC (the International
Federation of Consulting Engineers) forms are in use but not as fre-
quently as in other countries in the region.
The scope for negotiating the terms of these forms is limited; but
especially in larger projects and depending on the industry, modifica-
tions may be obtained by the contractor.
9 Price escalations
In typical construction contracts, who assumes the risk of material
price escalation and shortages?
Risk allocation is usually dealt with in the contracts. Contracts are
normally fixed price, with no provision for price escalation. The Civil
Code provides for price adjustment if the contract is concluded on
the basis of estimates (article 708) but excludes adjustment in case
of fixed prices (article 709).
This is increasingly problematic, given the high inflation rates
in the country and the depreciation of the Qatari riyal, which is tied
to the US dollar. This inflation and the pegging to the US dollar
have become a matter of wider concern, and depegging is a solution
that has been considered. The matter is related to the developments
with respect to the planned currency union within the GCC (the Co-
operation Council for the Arab States of the Gulf).
10 Competition
Do local laws provide any advantage to domestic contractors in
competition with foreign contractors?
There is no legal advantage for local contractors in private or govern-
ment tenders, but contractors (domestic or foreign) residing in and
operating out of Qatar are better positioned to be awarded business
based on their knowledge, prior experience and recognition in the
local market.
11 PPP and PFI
Is there a formal statutory and regulatory framework for PPP and PFI
contracts?
Due to the country’s wealth, infrastructure projects are generally
government-owned and operated. Some projects have been awarded
www.gettingthedealthrough.com
on a BOT (build, operate, transfer) basis; otherwise PPP projects are
not common. Contracts invariably provide for contractor’s warranty
and maintenance obligations for a predetermined period.
12 Payment of fees
How may a contractor secure the right to payment of its costs and
fees from an owner? May the contractor place liens on the property?
The safest mechanism, obviously, is the payment schedule under the
contract, with adequate advance and progress payments. Liens for
contractors and suppliers are provided for under articles 1184 to
1186 of the Qatar Civil Code.
Depending on the dispute settlement provisions in the contract,
claims for payment can be made in arbitration or in the state courts.
In addition, the contractor may apply for an attachment order on the
property under construction. The attachment order, if obtained, must
be validated by the contractor within a time period specified by the
court by initiating proceedings on the merits against the employer.
13 Tort claims and indemnity
Do local laws permit a general contractor to be indemnified against all
acts, errors and omissions arising from the work of a subcontractor,
even when the general contractor is negligent?
Liability of the subcontractor towards the main contractor depends
on the term of the subcontract. The main contractor’s negligence may
reduce or exclude the subcontractor’s liability or the quantum of the
damage that it must repair.
14 Liability to third parties
Where a contractor constructs a building that will be sold or leased
to a third party, does the contractor bear any potential responsibility
to the third party? May the third party pursue a claim against the
contractor despite the lack of contractual privity?
Under the Civil Code, contracts are binding only on the parties which
sign them. Consequently, contractual claims from third parties are
not possible.
15 Insurance
To what extent may a contractor obtain insurance to cover its
contractual risks?
There is no statutory obligation to buy insurance coverage. Contracts,
especially with government entities or agencies, however, regularly
require the contractor to take out insurance policies to cover certain
risks or all-risk and third-party liability during the performance of
the works. In addition, the contractor should bear in mind the 10-
year liability prescribed by articles 711 and 712 of the Civil Code.
16 Statutory payment protection
Where major projects have been interrupted or cancelled, do the local
laws provide any protection for unpaid contractors who have performed
work?
Article 57 of the 2005 Public Procurement Regulations provides that
the contract is avoided in cases of bankruptcy or insolvency of the con-
tractor. Similar provisions can often be found in the contract itself.
17 Contracting with government entities
Can a government agency assert sovereign immunity as a defence to
a contractor’s claim for payment?
All contract claims against government entities or agencies can be
pursued in court or, if so agreed, in arbitration. In some contracts
the government entity in question has expressly waived its immunity
from jurisdiction and from execution. We are not aware of a situ-
129
qatar Lalive in Qatar LLP

ation where a government entity or agency has invoked sovereign 22 Dispute resolution mechanisms
immunity in a construction dispute before the state courts in Qatar. What dispute resolution procedures are successfully used to solve
In the French case Creighton v Qatar, the state of Qatar claimed construction disputes?
sovereign immunity from execution against a foreign arbitral award
Construction disputes are usually referred to the local courts, and less
under ICC rules in France; the French Supreme Court (Creighton Ltd
frequently to arbitration.
v Qatar, 6 July 2000, Rev arb 2001, 114) denied such immunity. The
court ruled that the reference to the ICC rules, which provide that
the parties shall comply with all awards, amounts to a waiver of the 23 Courts and tribunals
immunity from execution. In other jurisdictions, an arbitration agree- Are there any specialised tribunals that are dedicated to resolving
ment may be construed as a waiver of immunity from jurisdiction, construction disputes?
but not from execution.
Construction disputes are tried by the courts for civil and commercial
We are not aware of any case in the courts of Qatar concerning
matters and the corresponding chambers in the Court of Appeals
the enforcement of a foreign arbitral award against the state. Qatar
and the Supreme Court. There are no specialised courts or chambers
has not ratified the United Nations Convention on Jurisdictional
specifically for construction disputes, nor is there a court-ordered
Immunities of States and their Property of 2 December 2004.
system of ‘adjudication’ in place in Qatar.

18 Bribery
24 Dispute review boards
If a contractor has illegally obtained the award of a contract, for
Are dispute review boards (DRBs) used? Are their decisions treated as
example by bribery, will the contract be enforceable?
mandatory, advisory, final or interim?
Article 57 of the 2005 Public Procurement Regulations provides that
There is no provision for DRBs in the Procurement Regulations but
the contract is void in cases of fraud and corruption. Bribery will also
the regulations also would not lead to the exclusion of DRBs. The
lead to criminal charges against responsible individuals including share-
practice of such boards under the FIDIC conditions and other model
holders and officers of the company or joint venture in question.
contracts is likely to lead to the use of DRBs in Qatari projects.

19 Arbitration
25 Mediation
What is the prevailing attitude towards arbitration of construction
Has the practice of voluntary participation in professionally organised
disputes? Is it preferred over litigation in the local courts?
mediation gained acceptance and, if so, how prevalent is the practice
Article 10 of the 2005 Public Procurement Regulations provides that and where are the mediators coming from?
the parties to a contract with the government or any public entity
There is no statutory definition of mediation, nor does Qatari law
may agree to arbitration, but require the approval of the minister of
provide for or regulate it. Mediation is not commonly used in Qatar
finance. The provision expressly requires that, pending the arbitra-
but contracts occasionally provide it as a preliminary step before the
tion, the parties must continue performing their obligations under the
dispute is submitted to arbitration or the courts.
contract. The regulations do not apply to Qatar Petroleum, which
regularly provides for arbitration, or to contracts by the military and
the police. 26 Confidentiality in mediation
Are statements made in mediation confidential?

20 Foreign corruption In the absence of applicable statutory provisions the confidential

Does local legislation prohibit corrupt practices carried out abroad by nature of a mediation would depend on the parties’ agreement
persons domiciled in your jurisdiction? (express and possibly implied). This is the case in particular, if the
parties adopt the generally available mediation rules, such as the
The territorial application of criminal law and its sanctions depends
ICC ADR rules, the mediation rules of the Swiss Chambers of Com-
on the rules of international criminal law. As a principle, criminal law
merce, the UNCITRAL conciliation rules or the LCIA mediation
applies only to acts committed in the country of the court’s jurisdic-
procedure.
tion. Among the exceptions are the provisions of the United Nations
Convention against Corruption of 30 January 2007 to which Qatar
is a signatory (see Decree No. 17 of 2007). The convention prohib- 27 Arbitral award
its acts of corruption anywhere in the world and requires states to Is there any basis upon which an arbitral award issued by a foreign or
establish as a criminal offence acts of corruption not only of officials international tribunal may be rejected by your local courts?
within the jurisdiction but also of foreign and international offi-
Enforcement of foreign arbitral awards is governed in Qatar by
cials. However, the convention also confirms the principle of non-
the 1958 UN Convention on the Recognition and Enforcement of
intervention of a state in the affairs of another state.
Foreign Arbitral Awards (the New York Convention), which Qatar
ratified in 2003 and which considerably limits the grounds on which
21 Force majeure and acts of God enforcement may be refused. Qatar adopted the Convention subject
Under local law are contractors excused from performing contractual to reciprocity; in other words, only awards from states that also are
obligations owing to events beyond their control? party to the Convention are enforced. With respect to awards from
states that have not ratified the New York Convention, article 381 of
According to article 188 of the Civil Code, contracts are avoided if
the Civil and Commercial Procedure Code applies.
they become impossible to perform. Similarly, article 704 of the Civil
The state of Qatar is undertaking efforts towards modernisation
Code, applicable specifically to contracts for work (including con-
and internationalisation of arbitration. Qatar arbitration law is cur-
struction) provides that in case of impossibility of performance the
rently set forth in the Qatar Civil and Commercial Procedure Code
contract is terminated. The contractor is compensated for the work
(part 1, chapter 13; and part 3, chapter 3).
within the limits of the enrichment of the employer. Contrary to the
laws of some other Arab countries, which have adopted the French
concepts of administrative contracts and imprévision, these concepts
are not part of Qatari law.

130 Getting the Deal Through – Construction 2010

Lalive in Qatar LLP qatar

28 Governing law and arbitration provider
If a foreign contractor wanted to pursue work and insisted by contract
upon international arbitration as the dispute resolution mechanism,
which of the customary international arbitration providers is preferred
and why?
Given the confidential nature of the contracts, it is difficult to give
any reliable answer to this question. It would seem that the most
popular arbitration rules are those of the International Chamber of
Commerce (ICC rules). The use of other rules, such as those of the
Swiss Chambers of Commerce (Swiss rules) or the London Court
of International Arbitration (LCIA rules) depends on preferences
and experiences of the parties and the lawyers or engineers assisting
them in the preparation of the tender documents or the contract
negotiation. Regional arbitration centres, in particular those in Cairo
(CRCICA) and Dubai (DIAC) are probably gaining in recognition.
In their respective fields the arbitration centres in the Qatar Finan-
cial Centre and the DIFC in Dubai (in cooperation with the LCIA)
also are competing for the business. Finally, the Qatar International
Centre of Arbitration is developing its activities and has had some
success with local and some foreign users.
The preferences concerning the choice of the places of arbitration
is equally difficult to ascertain. Doha, Paris, Geneva and London
are probably the most frequently chosen. Concerning the merits of
the dispute, there is a strong preference for the law of Qatar. The
choice of foreign law depends to some extent on the industry. In
construction contracts, English and Swiss law are probably the most
frequent choices.
29 International environmental law
Is your jurisdiction party to the Stockholm Declaration of 1972? What
are the local laws that provide for preservation of the environment and
wildlife while advancing infrastructure and building projects?
Qatar is not a signatory of the Stockholm Declaration. The basic
enactment in the field of environment is Law No. 30 of 2002 for the
Protection of the Environment. Pursuant to this law, the Supreme
Council of the Environment and Natural Reserves issued Decision
No. 4 of 2005, which provides, in chapter 2, for environmental
impact assessments for all public and private development projects.
30 Other international legal considerations
Are there any other important legal issues that may present obstacles
to a foreign contractor attempting to do business in your jurisdiction?
ates has both facilitated rapid economic growth and diversification
and provided significant on-the-job training for Qatari nationals.
31 International treaties
Is your jurisdiction a signatory to any investment agreements for
the protection of investments of a foreign entity in construction and
infrastructure projects? If so, how does your model agreement define
‘investment’?
As of 1 June 2007, Qatar has signed 34 bilateral investment agree-
ments (BITs), of which only 12 are in force, with the following states:
Belarus, China, Finland, France, Germany, India, Iran, Italy, South
Korea, Morocco, Romania and Switzerland.
To our knowledge there is no Qatari model bilateral investment
treaty. Consequently, the definitions of investment in the treaties con-
cluded by Qatar depend on the models of other states or the result of
negotiations in individual cases.
The BITs concluded by Qatar offer investors an option to initiate
ICSID arbitration or other forms of international arbitration, such
as ad hoc arbitration (eg, the French–Qatari BIT). As Qatar has not
signed the ICSID Convention, ICSID arbitration is not available for
the time being. However, arbitration under the ICSID Additional
Facility rules may be possible under some of the BITs.
ICSID arbitral tribunals frequently deal with claims by investors
related to construction projects, for example:
• Consortium RFCC v Kingdom of Morocco (ICSID Case No.
ARB/00/6) – construction of the section of a highway;
• Salini Costruttori SpA and Italstrade SpA v Kingdom of Morocco,
(ICSID Case No. ARB/00/4) – construction of the section of a
highway; and
• Amco Asia Corporation and others v Republic of Indonesia,
(ICSID Case No. ARB/81/1) – construction and operation of a
hotel.
32 Tax treaties
Has your jurisdiction entered into double taxation treaties pursuant
to which a contractor is prevented from being taxed in various
jurisdictions?
As per 1 July 2008, Qatar only has double taxation treaties with
the following countries: Armenia, Azerbaijan, Belarus, France, India,
Pakistan, Romania, Russia, Senegal, Seychelles, Singapore, Sri Lanka,
Tunisia, Turkey and Yemen.

Qatar still abides by a rather strict immigration policy that includes

restrictions on the numbers and nationalities of foreign workers. On
the other hand the entry of skilled and technically qualified expatri-

Marcus C Boeglin mboeglin@laliveinqatar.com

Michael E Schneider meschneider@laliveinqatar.com

QFC Tower Tel: +974 496 7247

PO Box 23495 Fax: +974 496 7244
Doha www.laliveinqatar.com
Qatar

www.gettingthedealthrough.com 131
qatar Lalive in Qatar LLP

33 Currency controls 35 Contractual matrix of international projects

Are there currency controls that make it difficult or impossible to
change operating funds or profits from one currency to another?
The riyal is freely convertible. Its exchange rate is pegged to the US
dollar, but this pegging causes increasing concern due to the erosion
of the value of the dollar. Five of the six GCC states, including Qatar,
have set out to create a monetary union with a single currency by
2010; one of the questions to be resolved concerns the pegging of the
new currency. It will have to be seen whether this ambition’s target
time can be met.
What is the typical contractual matrix for a major project in your
jurisdiction in terms of the contractual relationships among the various
construction project participants?
Qatar is undergoing a major construction boom with many infra-
structure, industrial and private building projects of which some are
very large. The contracting methods depend on the type of the project
and the entity developing it. There does not seem to be a typical
matrix.

34 Removal of profits and investment

Are there any controls or laws that restrict removal of profits and
investments from your jurisdiction?

No, there are no controls or laws that restrict the removal of profits
and investments from your jurisdiction.

132 Getting the Deal Through – Construction 2010

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